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tv   Closing Bell  CNBC  October 14, 2009 4:00pm-5:00pm EDT

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serious, but stable and expected to recover from that irregular heartbeat. >> hard to believe. a fixture on wall street. and in social circles in new york city. and it will be hard to believe, it will not be the same at the four seasons, for example, that bruce wasserstein is not there. thanks, david. we've got the closing bell. the dow will close above 10,000 it appears for the first time in more than a year. we go back to the second hour of the "closing bell" here with michelle caruso-cabrera. 4:00 p.m. on wall street as the dow jones industrial average closes above 10,000 for the first time in more than a year. i'm michelle caruso-cabrera. the dow crossing over the 10,000 mark, just seven months after the market hit a bottom on march 9th. more than a decade after
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reaching the 10,000 level for the first time. the market momentum also sending the s&p and the nasdaq to new highs for the year. oil, it closed above $75 a barrel for the first time in a year as well. here's a look at how we finished the day on wall street. the dow jones industrial average, 10,017. higher been # 45 points. a gain of #.5%. the s&p 500 also in positive territory. a gain of 19. 1,092. the nasdaq higher by #.5%. 32 points. 2,172. all in perspective, we have been here before. since the dow first closed above 10,000 back in the spring of 1999, it has crisscrossed that five-digit milestone 50 times on a daily closing basis. so either up or down on a closing basis. 50 times before today. unbelievable, right? hasn't been an everyday occurrence in recent years as we all know. the last time the dow crossed
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10,000 was a year ago, to the low of 6600. it has been almost five years since the dow crossed above 10,000. let's get more in today's action. we've got it covered on all fronts. let's hid over to our "eye on the floor" at the new york stock exchange. scott wapner. >> michelle, thanks so much. there was actually confetti thrown in the air by one trader. call this a psychological moment, what have you, it is significant nonetheless. the dow jones industrial average has closed above 10,000 for the first time in more than a year. 10,015 is where we'll go out today. let's talk about how we got here in the first place. we wouldn't even be having this conversation if stocks had not rallied so far off the march lows. look at the biggest movers since those dark days in march. financials, certainly leading the way. bank of america up better than 390%. citigroup may no longer be a
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member of the dow, but it's had a significant move. american express, jpmorgan and alcoa as well. on the financial story, intel may have started things after the bell yesterday with better than expected earnings. jpmorgan early this morning, blowout numbers, 82 cents versus 52 cents. that certainly lit a fire under this market. and certainly helped financial stocks today. take a look at what other financial stocks did as jpmorgan hitting a new high. other financial stocks rallying along with it. coming along for the ride today, you cannot tell this story of dow 10,000 without telling the story. dollar, and how weak it has been over the last, say, 12 months or so. the reason why is it has weakened, and energy stocks and commodity stocks have rallied. and multi-national stocks have benefited by the fact that the dollar has been weak. you saw how the dow and the dollar have diverged there, moving in opposite directions. energy stocks today, i mentioned
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oil closing higher, above $75 a barrel. higher by more than $1 today. oil services stocks also moving to the upside. halliburton, bj services, a pap che and schrum ber jay having a good day as well. drug stocks, too, defensive stocks, no defense today, folks. abbott labs had better than expected numbers. 2 cents ahead of estimates. they raised their outlook so there was money moving into the drug stock area as well. could have shown you pfizer as well, which is one of the best performers out of the dow today. and then amd as well. amd hitting a new high today. that really tells the story about technology as well. just playing off of those better than expected numbers from intel. michelle? >> all right. let's get over to bertha coombs standing by at the nasdaq. >> we have the nasdaq, like the rest of the indices, closing at the day's highs. yet intel doesn't. i was talking with one trader the fact that intel is treated a little bit like rodney dangerfield, not getting respect for what was a really
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outstanding report. better than expected. sales better than expected. outlook on its sales, not to mention better than expected numbers on the bottom line. nonetheless, intel at a new year high. trading above the levels it did, around the levels it did before the lehman collapse. that propelled the rest of chips. we're going to be hearing from xilinx today. the chip equipment makers were kind of mixed. a little bit of profit taking in there. the asml after posting earnings this morning, did see a bit of profit taking as well. hard for that one to hold that even on the day. hardware, not surprisingly better. intel basically saying that consumers were buying pcs. and intel's margins were better, which means they were buying more expensive pcs with more expensive chips in them. of course, now it's just teeing
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things up for google, which today also is at a new high. google will be reporting tomorrow after the close. and this one certainly will have a much broader impact in terms of just how the rest of the advertising market is doing, and whether corporations are spending on advertising. michelle? >> all key questions. thanks so much, bertha. we'll get more on the significance of crossing and holding above the 10,000 mark for the dow all the way into the close. what does it mean? richard bernstein, founder of richard bernstein capital management. and a portfolio at capital market. and jordan kotick at barclays capital. richard, let me start with you. how significant is dow 10,000? either technologically, psychologically, et cetera? >> unfortunately, michelle, you mentioned earlier this is now the 50th time we've crossed back and forth 10,000. i think that answered your own question. i don't think it's important in terms of the number. i think what's important is the
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stock market is continuing to advance. and if we believe that the stock market is forecasting tool for the economy as a whole, some people would argue that, but if we believe that, it's really saying that we are on a path to recovery and maybe we should start talking about expansion than just recovery. >> if you think it's a discounting mechanism, we should be on the way to something big here when it comes to finally hopefully job creation. do you agree with that? >> yes. the stock market typically discounts recovery in advance. it's good to see the strength and rapid itity of this recovery globally. not just the u.s., but every market. >> i think a lot of people are tuning in right now and wondering, did they miss it? what do you tell them? >> not at all. in fact, we believe about a third of the funds that left markets to go hide in cash from 2007 to the first quarter of '09 have yet to return.
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so there's still a big wave of money that needs to be invested in order to achieve the returns necessary for people to retire. cash just won't do it. and there are still large segments of the market that are very attractive. >> mr. kotick, what do you think? are people going to wake up tomorrow morning, see the front page, see the dow is back above 10,000, and all this money she's talking about sitting on the sidelines, some saying $1 trillion, $2 trillion would finally come back in the stock market? >> no, there's no reason to assume with money on the sidelines it has to come into the market. it may, it may not. i think richard was right on the money. to be clear, the market leads the economy. the economy does not lead the market. let's keep this in perspective. the dow above 10,000, that's important, but it's a global story. this is not an american story. american stock markets gives us leadership. but ultimately direction and strength comes from the global market environment. global stocks are going higher. they're taking the u.s. with it. you may stall at 10,000, but
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ultimately the global trend is more important than any short-term thresholds that the market is trying to cross through right now. you know, all three of you are bullish. makes me nervous when everybody's on the same page on the bullish side. but okay. we're going to leave it there. folks, thanks so much. >> thanks, michelle. >> talking about the technicals of the market. speaking at a conference in dubai, schwarzman seeing more than green shoots when it comes to economic recovery. unclear on the scale of growth. improved capital and equity markets will give a boost to the markets. blackstone shares higher by more than 7%. oil and gas producer chesapeake energy raising its outlook for both this year and next year, as much as 14% in 2011. the company announced one of the gas fields is not as robust as
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expected. one of the few weaknesses today, lower by 3%. otherwise overall higher date. the world's largest ligermaker say sales fell 6% on the quarter as wholesalers continued to cut inventory. the decline was double what wall street was expecting. down 45 cents. the dow topping 10,000 today, though. are we heading higher from here? or is there a pullback in the near future? we'll get the answers in a moment. an interview with the ceo that owns the toronto stock exchange. what trends he's seeing in the market and he'll give us the pulse of the retail investors.
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definitely the leader of the pack in terms of the big credit based financials.
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>> csx beating consensus. >> we think it's gradually improving. >> the one big thing that leads us out of this. >> for massive conversion, to green technology.
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we're back. we're sticking with what has been the story of the day, the dow flirted with the dow 10,000 level throughout the entire trading session and all the way, solidly into the close, held above that mark.
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what does that milestone mean for the markets going forward. joining us, three of cnbc's finest. tyler matheson. >> finest? >> yes. bill griffith. and of course, david faber. i think we were all here the last time. the first time the dow hit 10,000 on cnbc. ten years later, it feels good to get it on the upside instead of the downside. >> it certainly does. i think one thing we shouldn't lose sight of, look at the s&p also. because different ways those indexes are constructed. the s&p almost at 1100. byron wean, the guest host on "squawk box" thinks we'll end at 1,200 on the s&p. the dow crossing back above that 10,000 level suggests that at least for now, there is a much more bullish feeling on wall street. >> what do you think, do rallies beget rallies? do people open up their paper tomorrow or get on the internet
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now and see, i missed a lot here, maybe it's time to get in? does it unleash some of the money sitting on the sidelines? >> i think that remains to be seen. but good old-fashioned mojo can be a powerful tool on wall street. if people start to feel better, it's a very psychological game when you're investing. if people start to feel better about themselves and about the economy and the stock market, they will get in. but, you know, i'm the skeptic here. maybe i'm part of the wor ier. i'm skeptical about it at this point, with unemployment where it is, and the economy still not showing full signs of recovery at this point. >> david, besides the stock market, what about the credit markets? they've shown improvement. all of the traditional signs. >> they had help from the government. >> a lot of government mojo in there, too. >> no doubt. obviously, listen, back in march, when the dow was 6,600 and the s&p was, you know, a lot of people would have been hard
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pressed to imagine we would have had this kind of a rally. certainly i think the rally in part has been because suddenly corporations found themselves able to access capital. that's so important and has been such an important component of what has happened in our capital markets over the last seven months. that being said, i think a lot of the momentum has already shown itself in this market, michelle. a lot of hedge fund managers who i spend my day talking to, they've been playing because they have to. because they certainly don't want to -- but so few truly believe it. maybe that's a good sign some would say. but at end of the day, many people do come back to the consumer. they do come back to the 70% of the gdp. >> what is the market telling us, though? >> when we're relying on the con soomer to come back -- >> but is it telling us that in fact the consumer is going to come back or is coming back is this. >> we've seen this movie before. august of 1982, very high interest rates, very high inflation, a lousy economy, and
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the stock market took off at that point. and we were all scratching our heads. and we all know what happened at that point. late '89, the same thing. it's happened before, where the stock market is saying one thing, and some of the economic indicators are saying something completely different. this would be a classic launching pad for another bull market as it anticipates better days down the road for the economy. but i don't know. i don't buy it yet. >> you've got an awful lot of government money sort of backstopping the banking system among other things, and it's not just the capital infused into some of those banks, it was all kinds of other liquidity measures that have helped us get back a little confidence. >> you see, the different thing that's going to have to happen this time, is the government's participation this time, which has kept rates as low as they are, and joe, the nobel prize economist -- >> you're talking about the federal reserve, right? >> i'm talking about the federal reserve keeping interest rates as low as they are. joe told us a little while ago on "power lunch" that he feels this equity market is doing as
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well as it is, as are other asset classes because of low rates. people don't -- >> don't forget it's not just low rates, it's the fed's quantitative easing by $1.2 trillion, effectively printing that much money. that's the bear case. it's not necessarily one that says we're not going to go higher over the near term. but certainly when people look at the long term, and that fact set for the fed in terms of actually pulling the lever properly, and not increasing money supply -- >> look what happened the other day after ben bernanke delivered that speech where he just reminded everybody -- >> repeated exactly what he had said before. >> the fed has been as ak da tiff as needed to be in this economic climate. but at some point they would need to start raising rates. no timetable. you know, we're not there yet. we aren't even close. just the reminder set the stock market as much as it did that one day. >> today's rally sparked in part by the numbers from jpmorgan and
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yesterday from intel. jpmorgan still cautious on the consumer. home equity delinquencies continuing to rise. jpmorgan's got that covered because they're earning so much money, it's still a big concern for the overall economy. >> the stinky old curve in part. thanks. coming up next, an exclusive interview with richard ketchum. find out what the agency is doing to create greater oversight over the securities that were at the heart of the credit crisis. tdd#: 1-800-345-2550 tdd#: 1-800-345-2550 i want everything right where i can find it. tdd#: 1-800-345-2550 anything that makes trading easier. tdd#: 1-800-345-2550 i want to be right in the middle of the action-- tdd#: 1-800-345-2550 you know-- i have to see what's going on. tdd#: 1-800-345-2550 and when i pull the trigger... tdd#: 1-800-345-2550 ...i've got to get the best price out there. tdd#: 1-800-345-2550 (announcer) try the new schwab.com tdd#: 1-800-345-2550 for yourself. tdd#: 1-800-345-2550 call 1-888-4schwab
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take a look at the screen. that's right. dow 10,000. and tonight we have a cnbc special report, 7:00 p.m. eastern time, to talk about what got us to this milestone again. can we move higher from here. are earnings going to be able to power us forward. cnbc special 7:00 p.m., dow 10,000. the rosen blat security exchange ceo and investor conference is going on right now at the waldorf astoria. we have the ceo of the financial industry regulatory authority.
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bob, before we do that, the dow hitting 10,000 today. what's your reaction? >> you know, i think, look, i think it's important psychologically. let's not lose sight of the fact the dow crossed 10,00021 other times since the first time it did it over ten years ago. what the ceos here, all the guys who run the exchanges, were talking about today is, it's good news in the sense that it helps build investor confidence and helps build volumes of trading at the new york stock exchange. because that's their business, let's face it. i think it's important psychologically. i wouldn't put too much on it. rich ketchum, the guy who runs cindra here. who regulates this organization? this is the guy who does it. who is supposed to be looking out for your interest to make sure you're treated as an invest investor, this is the guy who did it. how is that for a buildup? >> i'm happy with it. >> does it mean anything to you as a regulator? >> regulator have different
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concerns. when the market goes down and i was on the floor of the exchange while i was at the new york stock exchange when it crashed below 10,000, those were terrible times. it is great to see it above. but regulation keeps on, we've got new problems, new investors issues to protect either way. >> let's talk about high frequency trading. such a big issue. high frequency trading, just another way of actually trading. but here's the question. can investors be disadvantaged by certain types of high-speed trading -- high-frequency trading? what are you doing to make sure investors are not being disadvantaged? >> that's a great question. as you say, high-frequency trading is just another form of trading. it doesn't advantage or disadvantage investors. it can be used inproperly, man ip la tifl, and we sur vafl particularly around the close where high-frequency traders may be very active. there are situations in which rules have been twisted in one way or another, to give high-frequency traders special access to orders. the s.e.c.'s in the process of basically adjusting their rules
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to eliminate the ability of something called flash orders that gave preferential access. >> would you agree that flash trading, as it was presented, doesn't pass the smell test? there's something that smacks of giving people an unfair advantage about it? >> it was an exception for a different time when you had floor manual trading. in an electronic environment where it should be all about driving prices with respect to bids and offers, where everybody has access to those, it doesn't pass the smell test. >> regulatory reform, president obama has made a big deal of it. they're worried about it here on the floor. wor rifd about short sales, and how likely are we to see significant reforms at this point? >> i think people watching this program should feel basically good about the reforms that are going to happen. first, it will fill some critical gaps. you'll have meaningful oversight
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of the over-the-counter derivatives. you're going to have more effective oversight of hedge funds. we hope you'll have more effective oversight with respect to the different regulatory schemes for both broker dealers and investment advisers. it goes directly to the people providing personalized advice to customers. all those things are good thing. i don't think you'll see anything from a transaction standpoint that will slow down the marketplace. the short selling rules at the s.e.c. may or may not be good ideas. but they're not game changers. >> we've got to let you go. but go ahead, michelle had a question here, i think. >> when you're talking about flash trading, concept actually i could see why people would get upset about it. some see an order flow before other investors. but to me that doesn't sound any different than dark pools, which are very big in a lot of the brokerage firms as well. if you're going to look at flash trading, you'll look at dark pools?
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>> well, you've heard chairman shapiro indicate she's going to look very closely at the broader side of the issues with respect to dark pools. i think the unique thing about flash trading is, it was an order sent to one marketplace that is required unless there's an execution there to be sent to the best quote wherever it is in other marketplace. and displayed to a privileged few. it could be a mutual fund you're invested in, mom and pop, or high-frequency trader. the basic concept that the order should go to the best quote makes a lot of sense. >> will you come back on the regulatory front? >> i would be delighted. >> rick used to be here for many years on the floor of the new york stock exchange. thanks very much for joining us. appreciate it. >> i bet he wishes he were there today for dow 10,000. jpmorgan chase telling investors during the conference call that regulation of overdraft fees could cost the bank $500 million
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a year in profits. the retail banking reported more than $8 billion in revenue in the third quarter. costs for current and consumer loan losses all by wiped out the business line's quarterly profits. we're going to discuss more about bruce wasserstein passing away. all right, now that the economy has changed,
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welcome back. the dow 10,000, we have a
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special coming up here at 7:00 p.m. eastern time, to commemorate this closes above 10,000 since as late as march of this year. we were closing at 6,500 in march. the dow is above 10,000 tonight. michelle will be anchoring a special on that at 7:00 p.m. eastern time. in addition to the dow 10,000, another breaking story, just minutes before the closing bell, we got word that bruce wasserstein had died just days after being hospitalized with what the firm described as an irregular heartbeat. my colleagues back here to talk about the man and what it means for lazard. remember, when he was brought in a few years ago, it was his idea to revive the fortunes of lazard and restructure it, and ipo this longtime private entity. and it met with a lot of unrest
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inside the firm. but ultimately it was a success. >> yeah. michelle ran lazard with an iron fist for many years, and certainly controlled the firm, ultimately brought wasserstein in, much to his chagrin. but wasserstein managed to get him out of the way, pay him off essentially through what was a very successful ipo. the last two or three years the firm has been public, they were doing well. the largest investment bank around right now given that morgan and stanley are no longer investment banks. >> with the collapse of that field, they prevailed, and advised on the bear stearns deal. >> a firm with a storied history. almost 120 years old. it goes back to the 1880s. felix ran it, steven ratner ran it. one of the very, you know, early strong partners in the latter history of lazard. they also turned it into an
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enormous asset management giant. very few people realize -- i have not looctds for quite some time, but at one juncture, in another period of my career, when we had conversations with lazard, they were managing well in excess of $100 billion. that was almost the secret side of their business. they had a lot going on in the investment banking. bruce was, you know, really expanded that business quite dramatically. >> he made waves not too long ago to try and encourage time warner to break up some of the assets, which ironically wasserstein helped put together there. >> that was a number of years ago, when carl had an active campaign to take an incentive fee there. >> he was not only a good friend, but he was one of the handful of people i really respected on wall street for his basic intelligence. he was the ultimate dealmaker, wasn't he? >> a really bright man.
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>> went to harvard law at 19. >> right. >> and went on to, i believe -- of course, went to first boston where he teamed with joe perella. went on to form their own firm, which wasserstein sold right at the top of the market to a german bank. >> and interesting, for a gentleman as young as he was when he passed, he left an indelible imprint on wall street. he was a big figure in the 1980s at first boston. he was involved in any way he could get involved in a variety of deals, for people ho had not read barbarians at the gate and story of rjr nabisco. bruce was an integral figure there. he effectively operated at the periphery of that deal. his involvement there was legend in certain ways. he was press shy publicly, but
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he did have journalists he spoke to on a regular basis. and added i think a great deal of color to a lot of stories. >> wasserstein advising on the kraft-cadbury deal right now. they have a lot of good bankers there. but certainly curious as to what they will say and what the future will look like for that company. >> today we mourn his loss. highly talented, very, very successful on wall street, it is the end of that era as it pertains to deal making. bruce wasserstein dead at the age of 61. what's on the minds of independent investors? let's ask. when you're trading a stock, every penny counts. i hate when the trade is done and you find out you paid more than the quote price. i want it at the price i expect... or better. td ameritrade's unique trading platform
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taking a look at today's business headlines. two of bernie madoff's victims are suing for failing to uncover his ponzi scheme. and engaged in serial gross negligence. for missing the fraud despite receiving numerous warnings and tips. they are seeking at least $2.4 million that they lost in madoff's fraud. redstone selling nearly $1 billion in cbs and viacom stock.
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while still retaining control of cbs and cbs. customers will be able to buy 1,000 minutes for $30 a month, or pay $45 for unlimited calling. the move will put pressure on pre-paid mobile rivals. teaming up with carlos on that deal. on a day when the dow closed above 10,000 for the first time in more than a year, what signals about what investors can expect. leo is chief investment officer. and barbara. and barclays capital. good to see you. leo, let me start with you. somebody's tuning in just now, they see dow 10,000, see this tremendous rally for the last few months. what do they do? should they get in here or have they missed? >> i think for a long-term oriented investor, this market
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is still one that investors can buy. you know, i think we've just started an earning season likely to be a very good one. the interest rates remain very low. and importantly, we've still got a ton of cash on the sidelines. i think what's happening is dow 10,000 is really taking a lot of the naysayers off the sideline and bringing them back into the market. >> we're all wondering when people start seeing the paper tomorrow, we get home tonight and see it on the internet, whether that will induce them to come in even more. barbara, what's the strategy you're employing here after the -- the low-hanging fruit has already got to be gotten here? >> i think so. although this looks like the third quarter where earnings beat very low expectations. i think that ha we have right now is a fourth quarter and first quarter of next year are fully loaded with a lot of positive economic activity. i think we could slow after that. so i would be -- i would be in the blue chip value fund, i like to invest in a companies that are selling at reasonable multiples. companies that give you a current return on your
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investments right now. >> so they pay a little bit of money but haven't gotten ahead of themselves so much. jordan, you're looking at a couple of charts here. you're a technician. what are they telling you here? >> the risk on trade, it trickles through the asset classes. bonds, commodities, let's look at the fx market. strong selling as the stock market's bid. what you can see here, as the market sold off last year, you saw the aussie dollar get hit. ever since then it's been an outstanding market to the top side. what we're seeing in this environment is selling aussie. they're selling the dollar, buying aussie. in this environment it suggests the dollar has further to go, as the bull market across the commodity currencies seem to be a good place to be. >> we've got two people who are bullish and one person who said it could float from here. leo, what do you say to people who are thinking, i should just go into bonds? >> i think bonds aren't a bad place to be. but i think, again, depending on
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time horizon, commodities, emerging markets and rather than own a taxable bond like a ten-year treasury in here, we're a little bit concerned about inflation. if someone's thinking about, you know, a few years out, i think owning protected securities provides bond-like return but with the inflation hedge that we'd like to see. >> barbara, you told us the characteristics of the stuff you would buy here. what are you staying away from? what looks way too expensive after this rally? >> i think companies with very strong earnings priced in over the next year or two. companies that are selling at multiples of 20 or so, with expectations at the last quarter or two will continue. >> what's the multiple that makes you nervous? >> or that you're comfortable with? >> it's so hard to say because the high multiple for industrials looks good. but say, 20 or above on normal earnings. you could buy a lot of global franchises, good companies with good balance sheets. i think those are good ones.
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>> jordan, you were looking at utilities, right? >> utilities tend to outperform when the market is bear. if we're wrong, if the market is going to start to turn to the downside, one of the things we'll start to see is utilities outperform. we're not seeing that in this environment. as long as they're in the defensive stocks, continue to younds perform, that's a good sign for the stock market. watching how the sector rotates, gives us the important information we need to understand where the market trajectory's going to be. >> all righty. good discussion, guys. see you later. thank you. dow 10,000, we have a cnbc special report tonight for you at 7:00 p.m. eastern time. will the recent rally spark a fresh wave of ipos? we'll talk all about it. coming up later here on the clo"closing bell," are the consumers buying back into the market. time now for going global asia. just getting started here in asia.
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here are the stories to watch. china will be hosting foreign direct investment figures for the month of september. august figures saw the first rise in 11 months. up about 7% on the year. the world's second largest flat paneling l.e.d. maker will post earnings today. lg expected to report profits doubling both on year and on quarter. reserve bank of australia governor glen stephens speaks this morning. we'll be listening to his views on the economy after the rba was the first of the g-20 central banks to raise rates amid signs of improving economic conditions. tune in to cnbc world to catch all the action overseas at the asia headquarters. going global with your money. xx
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mortgage applications falling nearly 2% last week as interest rates on 30-year loans rose to over 5%. meanwhile, the mortgage bankers association predicting the housing market could hit a road block in the first half of next year.
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cnbc's diana olick sh in washington with more details. >> michelle, the nation's mortgage bankers are taking a cautious approach to 2010. >> it's clear that the economy's going to be slowing up for the first half of next year. we had a boost of growth in the third quarter. consumer spending is just not coming back in the fourth quarter. and we see that continuing to slide. we're not going to go into another recession, but the first half of next year's definitely going to be slower. >> brinkman predicted home sales will rise 11% from this year. and that will show up -- and that will show up as well in a 12% increase in purchase originations. but he says refis in 2010 will decline 40% after a 60% surge this year. that's all thanks to mortgage rates which he believes will climb out of their record lows to end at 5.6%. mortgage rates will depend heavily on how the fedex tracts itself from buying fannie and freddie loans. >> i think there are a lot of
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people at the federal reserve looking at that same question right now. we're looking at it also. but the potential there is adding minimum perhaps a 20 basis point uptick in mortgage rates, and some of the estimates ranging considerably higher than that, if the transition is not adequately managed. >> brinkman is also concerned about the jumbo loan market which he called frozen right now. a great story on the las vegas real estate market. >> thank you, diana. we heard earlier from the ceo on financial regulation, attending this big conference in new york. attending this big ko conference in new york. from that very same conference joining us in a "first on cnbc" interview with exchange perspective is thomas cloitt, ceo of the tmx group, which owns and operates the toronto stock exchange. good to see you. >> hi, michelle, thanks for having me today. >> we're having a tremendous run in stocks here. it's driving a lot of trading revenue. a lot of these exchanges are making tons of money on
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high-frequency trading. are you seeing the same kind of trends in canada? >> well, we are. we're not seeing it to the full extent as in the u.s. high frequency traders represent roughly 15% to 20% of our market participation. but they certainly are coming to canada and participating in our marketplace. >> do you have the same concerns that a lot of the regulators down here, understanding you're not a regulator but -- >> right. >> -- a lot of the regulators down here don't like in particular flash trading where people get to see order flow ahead of other investors or buyers or sellers. do you offer that kind of ability, and are you worried about them shutting it down in canada? >> no, we don't offer flash trading in our marketplace. it's really not part of our marketplace model. we think the high frequency traders that exist under our rules really are adding liquidity to our marketplace and narrowing spreads, thereby making it easier for retail investors and institutional equity investors to enter and exit the marketplace at good pricing. >> there's all kinds of talk here about regulation and regulating the exchanges.
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what are your thoughts here? are you worried at all that the united states is going to go overboard when it comes to regulation? >> well, obviously, we're concerned about it, but one of the things we really feel is that there needs to be a level playing field between traditional exchanges and alternative trading systems that have been set up to compete with us. and that's really our focus has been on leveling that playing field. >> why? >> well, because we think that the exchange environment and the alternative trading system environment really operate in a seamless market and the overall regulatory structure should be the same for both operations. >> so are you saying that if it were even you could compete, or would the critics say to you you're just saying that because you're trying to put up basically protectionist barriers because you can't compete against these new far more technologically advanced exchanges? >> no, absolutely not. in fact, we welcome competition. but we welcome competition on a level playing field where the rulemaking and the approval of order types are similar in every
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market structure. and we think that's important for the investor so that the investor knows the rules under which his trade is interacting. >> where does north america fit overall in terms of competition with other exchanges around the world? >> well, it's very acute in north america. obviously, in the u.s. there are roughly 40 trading mechanisms that trade equities today. in canada we have five light areas and two dark pool areas. in europe there's extensive competition, particularly in the uk, but also throughout central europe. competition is yet to come in much of asia, but i think it's coming there as well. >> are you going to help them? is that a way to get revenue? i know a lot of the exchanges in europe and also here in the united states started looking to asia trying to get revenue out of that area of the world. is that something you're trying to do? >> well, we certainly are working with partners. in fact, we sold our derivative -- a version of our derivative technology to the london stock exchange for use in its derivative markets and consequently bought 20% of edx
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london, the london stock exchange's derivative operations. in addition to that we continue to look to work with partners both in europe and asia, where we can add something to their marketplace. >> are they going to get derivatives regulation right here in the united states? there's the easy derivatives, right? you've got a two-year interest rate swap. those are vanilla. you can trade those. but the custom made, the bespoke ones, they want to layer capital on there, make it more difficult. what's your prediction about how it's all going to play out? >> well, i think there's two important principles to remember. one is not all products can be standardized. for those that can be standardized they should really be driven to either have the price discovery on an exchange or a clearing -- cleared through a multilateral clearing mechanism. but i really think it's the capital rules that have got to drive that more than the regulation. and those are the capital rules that drieft activities of broker-dealers and banks. >> hopefully we can just have regulators do that rather than congress, but it seems like they want to get involved here. good discussion, thank you for joining us. >> thank you very much, michelle. >> let's head over to the nasdaq
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marketsite where melissa lee is standing by with more on what's coming up on "fast money." melissa. >> hey, michelle, we're all over dow 10,000. give you the best plays for the next leg of that rally. also jpmorgan earnings, take our position on citigroup and goldman sachs. and we've got a top-ranked internet analyst on the street to give us a trade on google ahead of its earnings. that and much more at the top of the hour. michelle. >> all right, mels p. stay tuned tonight 7:00 p.m., special on dow 10,000. we'll see you after this break, don't move. ♪ at the end of the day in sitka, alaska, everyone awaits the return of the fishing boats. ♪ their safe arrival is highly anticipated, ♪ as is something else. a shipment of natural sea salt from cargill, essential for preserving the catch. we deliver the salt on precise schedules... and ship it efficiently all along the alaskan coast; saving the fishermen money, and their catch. this is how cargill works with customers.
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>> announcer: here's what to watch for tomorrow. rick santelli on the floor of the cme group. tune in tomorrow 8:30 eastern for september cpi. maybe the most important metric to watch is year-over-year headline. it's been coming down from minus 2.1 to minus 1.5 last month. we're looking for minus 1.4 in that camp. >> i'm jim goldman in the silicon valley bureau. the tech earnings week started with intel, very good news there. tomorrow we'll get earnings news from ibm and google. will these two companies continue the massive rally we're seeing in technology? we'll be keeping an eye on it all day long. >> i'm mary thompson. this is what i'll be watching for on thursday on the heels of
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jpmorgan's strong results, rivals goldman sachs and citigroup are reporting their numbers. goldman expected to continue its winning ways with a profit of 4.24 expected. a different story for citi, though, where its losses forecast to narrow to 36 cents a share. and it is deja vu all over again. the dow topping the 10,000 level today, a decade after it first broke through that threshold. we're showing you the video from ten years ago. you may remember this memorable sight of nyse chairman dick grasso, that's before he shaved his head completely, tossing "dow 10,000" hats onto the floor at the close of trading on march 29th, 1999. all smiles back then. while they are not official, our crack crew down at the nyse found these "dow 10,000 again"

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